Natural Gas Price Outlook – Natural Gas Continues to See Upward Pressures

Natural Gas Technical Analysis

The natural gas market has rallied a bit during the early hours on Friday, as we have now broken above the $3 level, and it looks like we are going to continue to go higher. The question of course is whether or not we can break out past the previous swing high and continue to go higher. This is the time of year when you would expect a certain amount of strength in this market due to the fact that the Northeastern part of the United States is getting colder. And I can assure you from my drive this morning, it definitely is getting colder.

So therefore, demand for natural gas should be picking up. We recently saw a massive spike due to the hurricanes, but now we’re focusing on the seasonality in general. I don’t advocate putting a lot of leverage into the natural gas market, but I do recognize that there is a seasonal trade that I put every year into the market, and I take some profit out and I leave. But you do so with little in the way of leverage because you have to be able to ride through all of the noise on a day to day basis because quite frankly, the natural gas market is extraordinarily and inherently volatile because it’s driven by the weather.

And for those living in the northeastern part of the United States, as well as the Midwest, I can assure you that the weather patterns are volatile under the best of circumstances. So, it makes quite a bit of sense that short-term dips should continue to be buying opportunities, and I think your floor in the market is probably closer to the 50-day EMA, right around the $2.70 level.

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